Barbara Strozzilaan 336
1083 HN Amsterdam
The Netherlands
gssbsecretariat@globalreporting.org

Item 05 – GRI Universal Standards
Project – Revised GRI 101: Section 2.
Key concepts
For GSSB discussion
Date

8 February 2021

Meeting

25 February 2021

Project

GRI Universal Standards Project

Description

This document presents the revised draft of Section 2. Key concepts in GRI 101:
Using the GRI Standards following the public comment feedback. Key changes
are highlighted in comment boxes within the document. Minor editorial changes
have not been highlighted, but a draft tracking all changes to the text has been
included in the Annex.
The public comments on the key concepts section can be found here:
https://www.globalreporting.org/media/outfw4t2/item-01-public-comments-torevisions-on-key-concepts-in-the-universal-standards-exposure-draft.pdf

This document has been prepared by the GRI Standards Division and is made available to observers
at meetings of the Global Sustainability Standards Board (GSSB). It does not represent an official
position of the GSSB. Board positions are set out in the GRI Sustainability Reporting Standards. The
GSSB is the independent standard setting body of GRI. For more information visit
www.globalreporting.org.

© GRI 2021

1

Contents

2

Explanatory note ..................................................................................................................................... 3

3

Revised section 2. Key concepts ............................................................................................................ 3

4

Annex. Revisions with track changes ..................................................................................................... 6

Page 2 of 9

5Explanatory note

6

The following significant revisions have been made in response to public comment feedback:

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•
•
•

Clarified more prominently the importance and role of stakeholder engagement in the process
to identify an organization’s most significant impacts, see lines 26-27, 59-61, and 135-136.
Provided additional explanation regarding the relationship between sustainability reportingand financial and value creation reporting within Box 1, see lines 63-88.
Clarified the relationship between stakeholders and rightsholders, and between interests andrights, see lines 120-124.

13

Additional revisions made in response to public comment feedback are explained in comment boxes.

1415

The inclusion of ‘human rights’ in the phrase ‘impacts on the economy, environment, and people,
including impacts on human rights’ will be discussed at the GSSB meeting on 25 February 2021.

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17

Other editorial revisions have been made to the text to improve clarity and consistency with the GRI
Style Guide and are explained in comment boxes.

18

Revised section 2. Key concepts

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20
21
22

This section explains concepts that lay the foundation for sustainability reporting. Understanding how
these concepts are used in the GRI Standards is essential for those who collect and prepare
information for reporting, as well as for those who interpret information that is reported using theStandards.

23
24
25
26
27

The key concepts covered in this section are: impact, material topic, due diligence, and stakeholder.
The purpose of the Standards is to enable organizations to report on their most significant impacts on
the economy, environment, and people, including impacts on human rights – in the GRI Standards
these are referred to as material topics. Due diligence and stakeholder engagement helporganizations identify their most significant impacts.

28

2.1

29
30
31
32
33

In the GRI Standards, impact refers to the effect an organization has or could have on the economy,
environment, or people, including on human rights, as a result of its activities or business
relationships. The impacts can be actual or potential, negative or positive, short-term or long-term,
intended or unintended, and reversible or irreversible. These impacts indicate the organization’scontribution, negative or positive, to sustainable development.

34
35
36

The organization’s impacts on the economy refer to the impacts on economic systems at local,
national, and global levels. An organization can have an impact on the economy through, for example,
its competition practices, its procurement practices, and its taxes and payments to governments.

37
38
39

The organization’s impacts on the environment refer to the impacts on living organisms and non-living
elements, including air, land, water, and ecosystems. An organization can have an impact on theenvironment through, for example, its use of energy, land, water, and other natural resources.

40
41
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45

The organization’s impacts on people refer to the impacts on individuals and on groups, such ascommunities, or society more generally. An organization can have an impact on people through, forexample, its employment practices (such as the wages it pays to employees), its supply chain (suchas the working conditions of workers of suppliers), and its products and services (such as their safety
or affordability). Individuals or groups that have interests that are affected or could be affected by theorganization’s activities are referred to as stakeholders (see Section 2.4 of this Standard).

ImpactPage 3 of 9

Commented [SD1]: Type of change: revision following
public comment feedback and editorial revision.
New text added to clarify more prominently theimportance and role of stakeholder engagement in theprocess to identify an organization’s most significant
impacts.

Commented [SD2]: Type of change: revision following
public comment feedback.
New text added to clarify that people includes
communities and society.
Commented [SD3]: Type of change: editorial revision(change in location).
Commented [SD4]: Type of change: revision following
public comment feedback.
The following text has been moved to section 2.4
Stakeholder and has been modified following publiccomment feedback: “The most acute impacts anorganization can have on people are those thatnegatively affect their human rights.”
See lines 120-124.

46

2.2

Material topic

47
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50

An organization may identify many impacts on which to report. When using the GRI Standards, theorganization prioritizes reporting on those topics that represent its most significant impacts on theeconomy, environment, and people, including impacts on human rights. In the GRI Standards, these
are the organization’s material topics.

51
52
53
54
55
56
57

Examples of material topics are anti-corruption, occupational health and safety, or water andeffluents. A topic need not be limited to only impacts on the economy, or the environment, or people;
it can cover impacts across all these three dimensions. For example, an organization might determinethat ‘water and effluents’ is a material topic based on the impacts its water use has on ecosystems aswell as on local communities’ access to water. The GRI Standards group impacts into topics, like‘water and effluents’, to help organizations report in a cohesive way on multiple impacts that relate to
the same topic.

58
59
60
61
62

The process to determine material topics is informed by the organization’s ongoing identification andassessment of impacts. The ongoing identification and assessment of impacts involves engaging with
relevant stakeholders and experts and it is conducted independently of the sustainability reporting
process. See Section 2 of GRI 103: Material Topics for more information on determining material
topics.

63

Box 1. Sustainability reporting and financial and value creation reporting

64
65
66
67

The GRI Standards enable organizations to report on the most significant impacts of their activities
and business relationships on the economy, environment, and people, including impacts on humanrights. These impacts are of primary importance to sustainable development and to organizations’stakeholders, and they form the focus of sustainability reporting.

68
69
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71
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73

The impacts of an organization’s activities and business relationships on the economy, environment,
and people can have negative and positive consequences for the organization itself. These
consequences can be operational or reputational, and therefore in many cases financial. For
example, an organization’s high use of non-renewable energy contributes to climate change andcould, at the same time, result in increased operating costs for the organization due to legislation thatseeks to shift energy use toward renewable sources.

74
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Even if not financially material at the time of reporting, the impacts of an organization’s activities andbusiness relationships on the economy, environment, and people will eventually translate into
financially material issues. The impacts are therefore also important for those interested in thefinancial performance and long-term success of the organization. Understanding these impacts is anecessary first step in order to determine related financially material issues for the organization.

79
80
81
82

Sustainability reporting is therefore crucial for financial and value creation reporting. Information madeavailable through sustainability reporting provides input for identifying financial risks and opportunities
related to the organization’s impacts and for financial valuation. This in turn helps in making financial
materiality judgments about what to recognize in financial statements.

83
84
85
86
87
88

While the impacts of an organization’s activities and business relationships on the economy,
environment, and people may become financially material, sustainability reporting is also highly
relevant in its own right as a public interest activity. It is independent of the consideration of financial
implications. It is important for the organization to report on all the material topics that it hasdetermined using the GRI Standards. These material topics cannot be deprioritized on the basis thatthey are not financially material.

89

2.3

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93
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95

In the GRI Standards, due diligence refers to the process through which an organization identifies,
prevents, mitigates, and accounts for how it addresses its actual and potential negative impacts on
the economy, environment, and people, including impacts on human rights. The organization should
address potential negative impacts through prevention or mitigation. It should address actual negative
impacts through remediation, in cases where the organization identifies it has caused or contributed
to those impacts.

Due diligence

Page 4 of 9

Commented [SD5]: Type of change: revision following
public comment feedback.
Original wording: “reflect”.

Commented [SD6]: Type of change: revision following
public comment feedback and editorial revision.
Text revised to clarify more prominently the importanceand role of stakeholder engagement in the process to
identify an organization’s most significant impacts.
The explanation of significance is already included
under Section 2.3 Due diligence, so it has been
removed from this section to avoid duplication.
Original wording: “In order to prioritize its mostsignificant impacts for reporting, the organization needs
to assess the significance of the impacts. The
significance of a negative impact is assessed based on
its severity (scale, scope, and irremediable character)and likelihood. In the case of potential negative humanrights impacts, the severity of the impact takes
precedence over its likelihood. The significance of apositive impact is assessed based on its scale, scope,and likelihood. See Section 2 of GRI 103: Material
Topics for more information on assessing thesignificance of impacts.”
Commented [SD7]: Type of change: revision following
public comment feedback.
Text revised to provide additional explanation regarding
the relationship between sustainability reporting andfinancial and value creation reporting within Box 1.
See lines 211-227 for the original wording of Box 1.

96
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The way an organization is involved with negative impacts is important for determining how toaddress the impacts:

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•

The organization should avoid causing or contributing to negative impacts through its own
activities, and it should address such impacts when they occur by providing for or cooperatingin their remediation through legitimate processes.

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103
104

•

In the case of negative impacts that are directly linked to the organization’s operations,products, or services by its business relationships, the organization should seek to prevent or
mitigate these impacts even if it has not contributed to them. The organization is not
responsible for providing remediation for these impacts, but it can play a role in providing it.

105
106
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108

If it is not feasible to address all identified impacts at once, the organization should prioritize the orderin which it addresses negative impacts based on their severity and likelihood. In the case of potential
negative human rights impacts, the severity of the impact takes precedence over its likelihood. See
Section 2 of GRI 103: Material Topics for more information.

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Due diligence is elaborated by the United Nations (UN) Guiding Principles on Business and Human
Rights, the Organisation for Economic Co-operation and Development (OECD) Guidelines forMultinational Enterprises, and the OECD Due Diligence Guidance for Responsible Business Conduct.

112

2.4

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117

Stakeholders are individuals or groups that have interests that are affected or could be affected by anorganization’s activities.1 Common categories of stakeholders for organizations are business partners,
civil society organizations, consumers, customers, employees and other workers, governments, local
communities, non-governmental organizations, shareholders and other investors, suppliers, tradeunions, and vulnerable groups.

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121
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124

In the GRI Standards, an interest (or ‘stake’) is something of value to an individual or group, which
can be affected by the activities of an organization. Stakeholders can have more than one interest.
Not all interests are of equal importance and they do not all need to be treated equally. Human rights,
for example, have a particular status compared to other interests, as they set a threshold in terms of
the acuteness of impacts on people. The term ‘rightsholders’ is often used to refer to stakeholders
whose individual human rights or collective rights (held by groups such as indigenous peoples) are or
could be affected.

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Stakeholder interests can be negatively or positively affected by the organization’s activities. Due
diligence focuses on identifying stakeholder interests that are or could be negatively affected by theorganization’s activities.

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134

Stakeholders may not have a direct relationship with the organization; for example, the workers in theorganization’s supply chain can also be its stakeholders. The organization can also have an impact on
stakeholders, such as local communities, that live at a distance from the organization’s operations.
Stakeholders might themselves be unaware that they are stakeholders of a particular organization,
especially if they have not yet been affected by its activities. The organization should identify theinterests of these and other stakeholders who are unable to articulate their views (e.g., future
generations).

135
136
137
138

Engaging with stakeholders helps the organization identify and manage its negative and positive
impacts. Not all stakeholders will be affected by all activities of the organization. The organizationneeds to identify the stakeholders whose interests have to be taken into account in connection with a
specific activity (i.e., ‘relevant stakeholders’).

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The organization may not be able to engage with all relevant stakeholders directly. In these cases, theorganization can engage with credible stakeholder representatives or proxy organizations (e.g., nongovernmental organizations, representative public bodies).

Stakeholder

1

Organisation for Economic Co-operation and Development (OECD), OECD Due Diligence Guidance for
Responsible Business Conduct, 2018.

Page 5 of 9

Commented [SD8]: Type of change: editorial revision.
Original wording: “Stakeholders are individuals orgroups that have interests that are affected or could be
affected by an organization’s activities and decisions.”
The term “decisions” has been removed for alignment
with the OECD Due Diligence Guidance for
Responsible Business Conduct and for consistency withthe text of the GRI Standards.
Commented [SD9]: Type of change: revision following
public comment feedback.
“and other investors” has been added
Commented [SD10]: Type of change: revision
following public comment feedback.
Nex text added to clarify the relationship between
stakeholders and rightsholders, and between interests
and rights.
Commented [SD11]: Type of change: revision
following public comment feedback.
New text added.
Commented [SD12]: Type of change: editorial
revision (change in location).
Commented [SD13]: Type of change: revision
following public comment feedback.
New text added to clarify more prominently theimportance and role of stakeholder engagement in theprocess to identify an organization’s most significant
impacts.

142
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In addition to engaging with stakeholders, the organization can also consult with experts of specificissues or contexts (e.g., academics, non-governmental organizations) for advice on identifying andmanaging its impacts.

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152

Sometimes it is necessary to distinguish between stakeholders whose interests have been affected(i.e., ‘affected stakeholders’), and those whose interests have not yet been affected but could
potentially be affected (i.e., ‘potentially affected stakeholders’). This distinction is important in due
diligence. For example, if an organization’s activity results in a safety hazard, workers who are injured
because of the hazard are affected stakeholders, and workers who have not yet been injured but whoare exposed to the hazard and could be injured are potentially affected stakeholders. The distinction
between affected and potentially affected stakeholders helps identify which workers should receive
remedy.

153

Annex. Revisions with track changes

154

2. Key concepts in the GRI Standards

155
156
157
158

This section explains concepts that lay the foundation for sustainability reporting. Understanding how
these concepts are used in the GRI Standards is essential for those who collect and prepare
information for reporting, as well as interpreting thefor those who interpret information that is reported
using the GRI Standards.

159
160
161
162
163

The key concepts covered in this section are: impact, material topic, due diligence, and stakeholder.
The purpose of the Standards is to enable organizations to report on their most significant impacts on
the economy, environment, and people, including impacts on human rights – in the GRI Standards
these are referred to as material topics. Due diligence and stakeholder engagement helporganizations identify their most significant impacts.

164

2.1

165
166
167
168
169

In the GRI Standards, impact refers to the effect an organization has or could have on the economy,
environment, or people, including on human rights, as a result of its activities or business
relationships. These impacts can be actual or potential, negative or positive, short-term or long-term,
intended or unintended, and reversible or irreversible. These impacts indicate the organization’scontribution, negative or positive, to sustainable development.

170
171
172
173

The organization’s impacts on the economy refer to the impacts on economic systems at local,
national, and global levels. An organization can have an impact on the economy through, for example,
its competition practices, its procurement practices, and its taxes and payments to governments, its
procurement practices, or its competition practices.

174
175
176
177

The organization’s impacts on the environment refer to the impacts on living organisms and non-living
natural systemselements, including air, land, air, water, and ecosystems. An organization can have an
impact on the environment through, for example, its use of water, energy, land, water, and othernatural resources.

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185

The organization’s impacts on people refer to the impacts on individuals and on groups, such ascommunities or society more generally. Individuals or groups that have interests that are, or could be,affected by the organization’s activities and decisions are referred to as stakeholders (see Section 2.4of this Standard). An organization can have an impact on people through, for example, its
employment practices (such as the wages it pays to employees), its supply chain (such as theworking conditions of workers making the organization’s productsof suppliers), and its products andservices (such as their safety or affordability). The most acute impacts an organization can have on
people are those that negatively affect their human rights. Individuals or groups that have interests

ImpactPage 6 of 9

Commented [SD14]: Type of change: editorial
revision (change in location).

186
187

that are affected or could be affected by the organization’s activities are referred to as stakeholders(see Section 2.4 of this Standard).

188

2.2

189
190
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192

An organization mightmay identify many impacts on which to report. When using the GRI Standards,
the organization prioritizes reporting on those topics that reflectrepresent its most significant impacts
on the economy, environment, and people, including impacts on human rights. In the GRI Standards,
these are the organization’s material topics.

193
194
195
196
197
198
199

Examples of material topics could beare anti-corruption, water and effluents, or occupational healthand safety., or water and effluents. A topic need not be limited to one dimension, i.e., only impacts on
the economy, or the environment, or people; it can cover impacts across all these three dimensions.
For example, an organization might identifydetermine that ‘water and effluents’ asis a material topic
based on the impacts its water use has on natural ecosystems as well as on local communities’
access to water. The GRI Standards group impacts underinto topics, like ‘water and effluents’, to helporganizations report in a more cohesive way on multiple impacts that relate to the same topic.

200
201
202
203
204
205

In order to prioritize its most significant impacts for reporting, the organization needs to assess thesignificance of the impacts. The significance of a negative impact is assessed based on its severity(scale, scope, and irremediable character) and likelihood. In the case of potential negative humanrights impacts, the severity of the impact takes precedence over its likelihood. The significance of apositive impact is assessed based on its scale, scope, and likelihood. See Section 2 of GRI 103:
Material Topics for more information on assessing the significance of impacts.

206
207
208
209
210

The process to determine material topics is informed by the organization’s ongoing identification andassessment of impacts. The ongoing identification and assessment of impacts involves engaging with
relevant stakeholders and experts and it is conducted independently of the sustainability reporting
process. See Section 2 of GRI 103: Material Topics for more information on determining material
topics.

211

Box 1. Reporting using different materiality perspectives

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217

The GRI Standards focus on an organization’s most significant impacts outward: on the economy,
environment, and people, including impacts on human rights. These impacts can have negative or
positive consequences for the organization itself (such as operationally or reputationally, andtherefore in many cases financially). For example, an organization’s high use of non-renewableenergy contributes to climate change and could at the same time result in increased operating costs
due to legislation that seeks to shift energy use toward renewable sources.

218
219
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221

The outward impacts of an organization are therefore also important for those interested in thefinancial performance and long-term success of the organization. Understanding an organization’s
impacts outward is necessary in order to identify financially material risks, opportunities, and impacts
for the organization.

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226
227

An organization may want to report on its impacts outward as well as the financially material risks,
opportunities, and impacts it faces as a result of these outward impacts, in an annual report or an
integrated report, for example. When doing so, It is important for the organization to report on all its
material topics identified using the GRI Standards, in order to report in accordance with the GRI
Standards. The material topics identified using the GRI Standards need to be prioritized in their own
right and cannot be deprioritized on the basis that they are not financially material.

228

Box 1. Sustainability reporting and financial and value creation reporting

229
230
231
232

The GRI Standards enable organizations to report on the most significant impacts of their activities
and business relationships on the economy, environment, and people, including impacts on humanrights. These impacts are of primary importance to sustainable development and to organizations’stakeholders, and they form the focus of sustainability reporting.

233
234
235
236

The impacts of an organization’s activities and business relationships on the economy, environment,
and people can have negative and positive consequences for the organization itself. These
consequences can be operational or reputational, and therefore in many cases financial. For
example, an organization’s high use of non-renewable energy contributes to climate change andMaterial topic

Page 7 of 9

237
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could, at the same time, result in increased operating costs for the organization due to legislation thatseeks to shift energy use toward renewable sources.

239
240
241
242
243

Even if not financially material at the time of reporting, the impacts of an organization’s activities andbusiness relationships on the economy, environment, and people will eventually translate into
financially material issues. The impacts are therefore also important for those interested in thefinancial performance and long-term success of the organization. Understanding these impacts is anecessary first step in order to determine related financially material issues for the organization.

244
245
246
247

Sustainability reporting is therefore crucial for financial and value creation reporting. Information madeavailable through sustainability reporting provides input for identifying financial risks and opportunities
related to the organization’s impacts and for financial valuation. This in turn helps in making financial
materiality judgments about what to recognize in financial statements.

248
249
250
251
252
253

While the impacts of an organization’s activities and business relationships on the economy,
environment, and people may become financially material, sustainability reporting is also highly
relevant in its own right as a public interest activity. It is independent of the consideration of financial
implications. It is important for the organization to report on all the material topics that it hasdetermined using the GRI Standards. These material topics cannot be deprioritized on the basis thatthey are not financially material.

254

2.3

255
256
257
258
259
260

In the GRI Standards, Ddue diligence isrefers to the process through which an organization identifies,
prevents, mitigates, and accounts for how it addresses its actual and potential negative impacts on
the economy, environment, and people, including impacts on human rights. The organization should
address potential negative impacts through prevention or mitigation. It should address actual negative
impacts through remediation, in cases where itthe organization identifies it has caused or contributed
to those impacts.

261
262

The way an organization is involved with negative impacts is important for determining how toaddress the impacts:

Due diligence

263
264
265

•

The organization should avoid causing or contributing to negative impacts through its own
activities, and it should address such impacts when they occur by providing for or cooperatingin their remediation through legitimate processes.

266
267
268
269
270

•

In the case of negative impacts that are directly linked to the organization’s operations,products, or services by its business relationships, the organization should seek to prevent or
mitigate these impacts even if it has not contributed to them. The organization doesis nothave a responsibility to provideresponsible for providing remediation offor these impacts, but
it can play a role in doing soproviding it.

271
272
273
274

If it is not feasible to address all identified impacts at once, the organization should prioritize the orderin which it addresses negative impacts based on their severity and likelihood. In the case of potential
negative human rights impacts, the severity of the impact takes precedence over its likelihood. See
Section 2 of GRI 103: Material Topics for more information.

275
276
277
278

Due diligence is elaborated by the United Nations (UN) Guiding Principles on Business and Human
Rights, the Organisation for Economic Co-operation and Development (OECD) OECD Guidelines forMultinational Enterprises, and the OECD Due Diligence Guidance for Responsibilitye BusinessConduct.

279

2.4

280
281

Stakeholders are individuals or groups that have interests that are, affected or could be, affected byan organization’s activities and decisions.2 Common categories of stakeholders for organizations

Stakeholder

2

Organisation for Economic Co-operation and Development (OECD), OECD Due Diligence Guidance for
Responsible Business Conduct, 2018.

Page 8 of 9

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284

includeare business partners, civil society organizations, consumers, customers, employees andother workers, governments, local communities, non-governmental organizations, shareholders andother investors, suppliers, trade unions, and vulnerable groups.

285
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288
289
290
291

In the GRI Standards, an interest (or ‘stake’) is something of value to an individual or group that,which can be affected by the activities and decisions of an organization. Stakeholders can have morethan one interest. Not all interests are of equal importance and they do not all need to be treatedequally. Human rights, for example, have a particular status compared to other interests, as they set a
threshold in terms of the acuteness of impacts on people. The term ‘rightsholders’ is often used torefer to stakeholders whose individual human rights or collective rights (held by groups such as
indigenous peoples) are or could be affected.

292
293
294
295

Stakeholder interests can be negatively or positively affected by the organization’s activities anddecisions. Due diligence focuses on identifying individuals or groups whosestakeholder interests,
such as their human rights, that are or could be negatively affected by the organization’s activities anddecisions.

296
297
298
299
300
301
302
303

Stakeholders domay not need to have a direct relationship with the organization; for example, theworkers in the organization’s supply chain can also be its stakeholders. The organization should also
identify the interests of those who are unable to articulate their views (e.g., future generations). The
organization can also have an impact on stakeholders, such as local communities, that live at a
distance from the organization’s operations. Stakeholders might themselves be unaware that they are
stakeholders of a particular organization, especially if they have not yet been affected by its activities
and decisions. The organization should identify the interests of these and other stakeholders who areunable to articulate their views (e.g., future generations).

304
305
306
307

Engaging with stakeholders helps the organization identify and manage its negative and positive
impacts. Not all of an organization’s stakeholders will be affected by all activities and decisions of theorganization. The organization needs to identify the stakeholders whose interests have to be taken
into account in connection with a specific activity or decision (i.e., the ‘relevant stakeholders’).

308
309
310

The organization mightmay not be able to engage with all relevant stakeholders directly. In thesecases, the organization can engage with credible stakeholder representatives or proxy organizations(e.g., non-governmental organizations, representative public bodies).

311
312
313

In addition to engaging with stakeholders, the organization can also consult with experts onof specificissues or contexts (e.g., academics, non-governmental organizations, academics) for advice, such as
for on identifying and managing its impacts.

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315
316
317
318
319
320
321

Sometimes it is necessary to distinguish between stakeholders whose interests have been affected(i.e., ‘affected stakeholders’), and those whose interests have not yet been affected but could
potentially be affected (i.e., ‘potentially affected stakeholders’). This distinction is important in due
diligence. For example, if an organization’s activity results in a safety hazard, workers who are injured
because of the hazard are affected stakeholders, and workers who have not yet been injured but whoare exposed to the hazard and could be injured are potentially affected stakeholders. The distinction
between affected and potentially affected stakeholders helps identify which workers should receive
remedy.

322
323

These distinctions are important in due diligence. In the example of the safety hazard, identifying
workers who are injured is necessary to determine which workers should receive remedy.

Page 9 of 9